Daniel Stewart

Guide on How to Build Credit

A solid credit score can help you cross many financial milestones. You need a good score to get your first loan, buy a home and more. But there's just one problem: You have to build credit first.

Young people start their adult lives with relatively low credit scores because they need more time to build up their credit history. It takes time to improve your score, and the longer you show that you can repay your bills, the better your creditworthiness becomes.

Here are a few ways you can begin building your credit.

Become an Authorized User

Here's a great way young adults can start their credit journey on the right foot. An authorized user is someone added to the credit card account of someone else. For example, you can become an authorized user of your parent's credit cards.

As an authorized user, you get many perks. You can use the card as if it was your own. The primary cardholder is responsible for payments, but credit card providers typically report the positive payment history to credit bureaus for the authorized user. Therefore, you build credit without the risks of having your own credit account!

This arrangement can unlock one of the best cards for students to build credit. However, it is a double-edged sword. If the primary cardholder misses payments or uses their account irresponsibly, your credit score will suffer, too.

Open a Credit Card

Getting a line of credit with no credit history can be challenging. However, there are some options to help you establish and build credit. Many lenders offer student cards. They have modest perks and give you a taste of the responsibility.

Credit card providers also offer secured lines of credit. In that case, you deposit money to establish credit. Secured cards can help you get your foot in the door before transitioning to a standard line of credit.

A credit-building debit card is one of the best cards for students to build credit. These cards are different from traditional credit cards. Instead of getting a large line of credit, the cards limit you to what you have in your existing bank account. After using the credit-building debit card as an everyday spender, you pay everything off with your linked bank account. The provider then reports your payment history to the credit bureaus. It's the benefits of a credit card without the risks.

Author Resource:-

Daniel Stewart writes about student debit cards and taking control of your finances services. You can find his thoughts at debit card for students blog.